Every successful retailer will attribute part of their growth to effective inventory management. This is the process of managing your stock and analysing its lifetime progress so you can make better decisions about when to order items, how to store them best, and how to distribute them without incurring losses.
Though it sounds simple enough to note down on a spreadsheet—especially for a small business with limited stock—purchasing, storing, rotating, and reordering products can be challenging without the right tool. For example, when you manually track deliveries in a spreadsheet or jot it down as notes, you might accidentally enter duplicate or inaccurate information. This could lead to overstocking, where you can't sell your stock fast enough and end up with losses or shortages. In the long run, you may end up letting your customers down because you weren't able to predict how much to order based on demand.
With an inventory management application, you can manage your stock effectively and avoid all those scenarios.
Inventory management apps for small businesses
Every business can benefit from implementing an inventory management app. But the key to efficiently managing your inventory isn't only about having an app for it, but also about choosing the right way to manage it all. For example, based on your business size, industry, and budget, you can choose from various inventory management methods such as just-in-time (JIT), economic order quantity (EOQ), days sales of inventory (DSI), and materials requirement planning (MRP). Once you choose which method works best for your business, you can select an inventory management app that caters to your needs. Let's look at some of the key functions of a good inventory management application.
Essential integrations: Inventory management works hand in hand with other business processes. For example, to avoid data mismatches, your CRM system will automatically sync customer, supplier, and product information to your inventory manager and to your accounting software. This way, when someone purchases your product, their purchase will be automatically updated against that customer's record in your CRM. Your inventory management app will also track every sale so that it can notify you when you're running low. What's more, it'll generate an expense in your accounts, and once you contact your vendor through your CRM, your inventory manager will update their order status to pending delivery. When information flows easily from one system to another like this, you can get work done without delays or interruptions.
Categorisation of goods: Your inventory system is not only a database, but also a comprehensive catalogue, which means that you can categorise your products by attributes, brands, types, sizes, and even colours. Some inventory software even allow you to bundle your products so that when integrated with your online store, it'll register as a single purchase. This makes it easier to account for each sale. As you grow and diversify your stock, you can create further categories to manage your stock more effectively.
Automation: The biggest benefit of adopting an online inventory manager is that it eliminates manual data entry. Instead of dealing with paper-based processes, you can set up a bar code scanner to take stock quickly. Aside from saving the time and effort, it also reduces errors. Looking up information and updating details is also easier when you barcode your products. Above all, you can create automated workflows based on each product. This means you can customise purchase confirmations with your customer's name (pulled from CRM) and any additional details of the product they purchased. Standard information fields will also be automatically filled, like terms and conditions, your return policy, shipping information on purchased orders, and more.
Data analytics and reporting: Understanding sales patterns is essential for growing your business. For example, if your top-selling product is mugs, you need to also know whether it's the mugs with images or the mugs with quotes that are selling more. An inventory manager automatically analyses your sales data to generate specific reports about your products and variants so you can make educated decisions about your subsequent orders. These analyses can often extend beyond your products and into the purchasing behaviours of regular customers, delivery times from your suppliers, and even the health of each batch of stock you have so you can accurately asses damages and arrange alternatives.
Choosing an inventory management vendor
One of the reasons many small businesses choose to manage their processes on spreadsheets is because every popular software available seems too complex and out of their budget. But that doesn't mean you can't get a customised feature set and price. Most vendors offer budget-friendly small business packages with only the core features you need. Here are three main things to look for when choosing an inventory management application vendor.
Value for price: It can be challenging to find a vendor who offers an affordable product but also provides the whole range of functionality you need. Make sure that the vendor you're evaluating allows you to integrate with other systems you already use, like your CRM and accounting systems. If you're only just starting out, choose a vendor that has additional capabilities built into it so you can have everything in one place. Zoho One, for example, offers a CRM, finance suite, sales and marketing tools, an ecommerce platform, and more along with inventory management. You can choose as many or as few of the apps you need for your business.
The biggest challenge in buying software is that we rarely consider hidden costs, like hiring consultants to integrate your systems for you. Packages are a good way to save money, especially when you're small and growing.
Local taxes and compliance: Make sure that the vendor incorporates local regulations like GST within the system. Having the vendor take care of these things reduces the burden on your shoulders. Come tax time, you can be sure that you've been compliant and don't have to spend weeks re-evaluating your sales with a tax agent.
Education and support: Adopting a new piece of software into your business is always a process. Before you commit to a vendor, verify that they have the necessary educational material, regular announcements, round-the-clock customer service, and ongoing workshops to help you stay up to date. Above all, choose a credible vendor who will put your needs first and help you out in case you get stuck.
An inventory manager isn't a fancy application exclusive to big businesses. In its most fundamental form, an inventory management system is an essential tool for businesses of any size to manage their stock and run a frictionless business. Before you invest in software, however, do your research and make sure that the vendor you choose is compatible with your requirements and that you can rely on them to be around for the long term.